NZ-founded venture capital firm launches fund for Web3 projects
Aera VC, the Singapore-based venture capital firm co-founded by New Zealand entrepreneur Derek Handley, has launched Aera Force, a DAO (distributed autonomous organisation) to fund blockchain and other Web3 projects that tackle climate change.
Aera Force is initially raising the equivalent of 2000 ETH (Ethereum) tokens for investment, currently valued at around US$5.3 million - the price of the cryptocurrency is currently quite volatile.
The ETH is set aside specifically for pre-seed projects that are based on the blockchain and aimed at decarbonising industries.
"At Aera, our long-term vision is about investing across the sustainability spectrum, by backing breakthrough technologies that reverse climate change, whether they spawn from blockchain innovations or through scientific discoveries," says Aera VC co-founder Derek Handley.
"Every industry needs to be reimagined, from finance, food and fashion, through to chemicals, cement and construction. And we are backing the very best founders hell-bent on making this happen."
How can blockchain technology help tackle climate change? A number of start-ups through to tech giants like Microsoft and IBM are using the blockchain to improve transparency, accountability and traceability of greenhouse gas emissions. The aim is to get more accurate and reliable information on an organisation or supply chain's carbon footprint.
Aera Force's fund structure
Aera VC has previously invested in Carbon Chain, a Texas-based company that uses blockchain technology to track emissions through commodity supply chains.
Aera Force is described as "a learning experiment co-founded by Gotham Labs, New York-based creator of the DreamDAO" and Aera VC.
DreamDAO, according to its website, "invests in the future of the web3 x social impact ecosystem by providing diverse Gen Zers around the globe with the training, funding, and mentorship they need to leverage the power of web3 to secure a brighter future for humanity."
A green paper lays out how the DAO will operate. Aera Force takes a 10% management fee for investments made, with 5% going to community rewards and the remaining 85% going to the funded project.
A DAO is a new way of running an organisation with the use of blockchain technology and smart contracts to record details of transactions and set the rules by which the entity will operate. Aera Force points out on its website that decision making will be conducted by collective vote.
Investors joining Aera Force's Web3 fund need to meet wealth and investment thresholds. When they make their investment, they effectively mint an "Investment Ticket NFT", a non-fungible token that represents a 10 ETH investment (around US$27,000 currently). A smart contract records then investment which is held until KYC (know your company) checks are performed.
Those Investment Ticket NFTs represent investors' interest in projects Aera Force invests in and any profits from the fund are distributed according to the Ticket NFTs they hold. Tapping into the NFT art movement, each investor also gets a unique piece of digital art.
The DAO investment vehicle is launched as Aera VC closes a US$30 million investment in its climate change-focused investment fund. Aera says it expects to make "up to 30 new seed investments over the next two years" and will also contribute to follow-on rounds. The fund is continuing to accept further subscriptions up to $US100m from institutional investors in 2022.
DAOs have largely been used to date to fund ventures in the crypto market, though a host of social enterprises and community initiatives have adopted the DAO model too. Local economic research firm BERL says the DAO model can serve to minimise transaction costs with a flat organisational structure over multiple geographies and timezones.
"Is a DAO perfect for all businesses and the greatest thing since the internet gave us dank memes? Absolutely not. A DAO is just another option for organising your firm and cooperating with your fellow humans. It might not fit your business and that's just fine, having options is always good," write's BERL economist Konrad Hurren.
"To me, the type of business that a DAO would suit is where the owners share a common goal of helping a particular community in some way and are spread geographically with a flat organisational structure. Social enterprises in particular often fit this description."
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